An Eastern Democratic Union: A Proposal for the Establishment of a Durable Peace in Eastern Europe

[This essay, written in October 1941, in one of Mises's lesser-known works and explores the use of a decentralized federal structure in establishing greater peace and freedom in Eastern Europe.]1

I. Peace Within a World of Nationalism

In a world of free trade and democracy no special institutions and provisions are needed in order to ensure undisturbed peaceful cooperation among all nations. In such a world, where there are neither trade barriers nor migration barriers; where the activities of governments are limited to the protection of the lives, the health and the property of individuals against violent or fraudulent aggression; and where neither the laws nor the administration nor the tri­bunals discriminate between different groups of citizens or between citizens and foreigners; it is without any importance for the indi­vidual, where the frontiers of his country are drawn. Every indi­vidual has the opportunity to live and to work where it suits him best. Nobody can derive any advantage from a change in the political distribution of the earth's surface. No citizen can be enriched by a victorious war, which makes his country larger at the expense of other countries. War does not pay. The nations become peaceful because they consider warfare as a useless waste both of blood and of wealth.

Our world is very different from this liberal free-trade utopia. We are living in an age when the governments are eager to further the short-run interests of some groups of their citizens at the expense of other groups of citizens and of foreigners. Ours is an age of economic nationalism. Economic nationalism is a policy which intends to improve the lot of greater or smaller groups of citizens by putting impediments in the way of foreigners. Foreign products are with­held from the domestic markets; foreign labor is banned from the com­petition on the domestic labor market. Whether these measures can really attain the ends which the governments want to attain or whether they do not in the long run hurt, in some way or other, the citizens whom they want to benefit is immaterial. The decisive point is that the great majority of our contemporaries firmly believe in the efficacy of these measures of economic nationalism. There is therefore no hope that the world will in the near future try to embark upon a policy of free trade.

Such is the stark reality we have to face. We should not deceive ourselves by false illusions. All the arguments brought forward in order to demonstrate the disadvantages of warfare and the benefits of undisturbed peace are vain in an age of economic nationalism. Under present conditions the pacifists are mistaken when they declare that a victorious war does not pay. It is true that the individual citi­zens of Germany did not gain anything in 1871 by the conquest of Alsace-Lorraine. This was in the days of a more or less free-trade Europe. But today it is different. For instance, a conquest of Australia by the Japanese would, under present circumstances, improve the lot of every individual Japanese wage earner. It would give a great number of Japanese the opportunity to work in Australia where the natural opportunities for production are much more favorable than in the overpopulated Japanese isles. It would therefore raise the level of wages and the standard of living for all Japanese wage earners, both for those who could emigrate to Australia and for those who remain in their old country.

Whereas in a world of universal absolute free trade every nation is eager to maintain peace, in a world of economic nationalism those nations which believe themselves strong enough are ready to profit from every opportunity to attack weaker nations. In such a world there is no solidarity of interests but a permanent latent conflict of interests which becomes manifest as soon as a good chance for prey appears. It is useless to fight this militarist bellicosity by mere moral condemna­tion. Both the Covenant of the League of Nations and the Briand-­Kellog Pact failed, because the warlike nations considered them as nothing else than, an insincere protection of the unfair privileges of the weak. The principle of collective security could not work in a milieu where every nation waged a permanent economic war against all other nations.

We may hope that this unsatisfactory state of things will one day be replaced by a mentality of free-trade and good-will. But we have to realize that it would be foolish to believe that trade-barriers and migration-barriers will be abolished directly after this war. We therefore have to try to discover means which could make peace durable even in this age of radical nationalism.

Nations inspired by the spirit of nationalism recognize only one argument in favor of peace, namely, that there is but little hope of success for their armed forces in waging war. What is wanted, there­fore, is some way to build up a political structure which would pre­vent the nations calling themselves "dynamic" from use of their powers for aggression.

It is very probable that the British Empire, the American Republics and some of the democracies of Western Europe will after the war arrange for permanent political and military cooperation in order to assure themselves security against German and Japanese aggressions. Whether constructed according to the pattern laid out by Mr. Clarence Streit or in another way, such a union could peacefully settle conflicts in all countries from the left bank of the Rhine westward to the western boundaries of the British sphere of influence in Asia. But just that part of the earth whence both world wars originated would remain outside. A special scheme for a durable peace in Eastern Europe is a necessary condition for the satisfactory working of all plans to make the world safe for peace.

II. The German Problem

The following proposals for a new political constitution of Eastern Europe are based on two assumptions.

The first assumption is a total defeat of Nazism. We do not have to worry about what will happen if the Nazis could end their total war by a total victory. They will exterminate some of the vanquished nations, ex­pel others from Europe and enslave the remaining ones. In the "New Order" the members of the Nazi party will rule over slaves.

The second assumption is that the victorious British Empire and its allies will not use their total success to exterminate the German nation. We assume that the victors will neither kill all Germans nor expel them to the Arctic Circle; of course, they do not even consider such a barbaric plan. But then the German problem remains unsolved.

This German problem consists in the firm conviction of the German nationalists that the German nation is the strongest military power on earth. The German philosophers, historians and would-be economists who have ex­pounded these doctrines for more than eighty years base their statements on the following arguments:

1. The Germans are the most numerous among the white nations. It is a mistake to believe that the Russians or the Americans are more numerous than the Germans are. From the total figures of the inhabitants of European Russia the non-Russians (Ukrainians, White Russians, Mongolians and others) have to be deducted; the remaining numbers of the Great-Russians are in­ferior to those of the Germans. The Americans are not a homogeneous nation, but a minority of Nordics amidst Negroes, Jews, Slavs, Italians and other "inferior" races.2

2. The Germans own that country which dominates strategically the whole of Europe and some parts of the two adjacent continents. They enjoy in warring the advantages of standing on interior lines.

3. The Germans are a warlike nation; they are heroes, whereas the other white nations are peddlars (Händler), who stick to pacifism and cowardice.

4. The genuine Germans have always been socialists in their soul and have, under the guidance first of the Hohenzollerns, later of Adolf Hitler freed themselves from the domination of Western and Jewish ideas; their mind has only superficially or temporarily been infected by Christianism, Humanitarianism, Capitalism, Utilitarianism, Liberalism, Democracy and Bolshevism.

5. Strong, as they are, the Germans have therefore the sacred duty to conquer and to rule the world. As supermen they will tame the underdogs, to whom the appellation "human" should be denied. Such is the will of the German God, who gave power to his chosen people, the Germans.

The main accent lies on the first of these five points. "We are a nation of 100 millions; therefore we are chosen to own the earth." It is necessary to realize that German nationalism differs from the nationalism of other nations only in the fact that the Germans believe themselves to be the strongest of all nations. They are not prepared to endure the disad­vantages which the economic nationalism of other nations imposes on them, because they feel themselves strong enough to do away with these discriminatory measures. They say: "Smaller nations may acquiesce in the actual distribution of the resources of the earth; we, the big German nation, cannot tolerate this state of things." The Nazis are full of contempt for the Norwegians and the Danes, because they themselves are many and these "Nordic" nations are small.

As long as the world is on the line of economic nationalism and as long as there are 80 million Germans living in Europe and 20 million in non-­European countries the spirit of aggression will dominate the political thought of Germany. Nazism is not a new doctrine. It has a long history. Fichte, List, Lassalle, Lasson, Lagarde, Langbehn, Richard Wagner, Treitschke, Schmoller and Houston Stuart Chamberlain, were its sponsors. The doctrine was completely laid out in the course of the 19th century. Spengler, Spann, Sombart, Hitler and Rosenberg did not add any new ideas; they only repeated and emphasized the old slogans.

Nothing can prevent a new German aggression but an organization of Europe which makes it hopeless for Germany to embark on a new war of con­quest. The political and military union of the Western democracies will stop Germany at its western and northern frontiers. Special provisions are needed to stop it at its eastern and southern frontiers.

The German danger has to be seen not in the spirit of aggression which inspires most of the Germans of our time, but in the military strength of Germany, which makes such an aggression a dreadful menace. The other nations which share today a similar mentality of aggression are less danger­ous. They all would be innocuous but for the constellation created by nazified Germany's "dynamism."

To carry out a scheme for a durable peace is not the outcome of hos­tility or hatred against Germany, Italy or Japan, the three aggressor nations of our times. The blessings of peace will benefit these nations in the same way they will favor the rest of mankind. The purpose of all plans for a lasting peace which involve the existence of these three nations is exactly this: to give to the vanquished nations after the war the op­portunity to become again incorporated into the great human society of free nations. Germans and Italians were from time immemorial foremost among the shapers of our civilization. We may hope that they will one day remember that this civilization, which they despise today, was to a great extent an achievement of sons of their own peoples.

It is the aim of the following plan to make it unnecessary for the victorious Allies to consider any proposal which intends to treat the van­quished peoples in the same way in which the Nazis wish to treat the con­quered in case of their total victory.

III. The Clash of Linguistic Groups

The term "Eastern Europe" as used in this paper includes the whole territory between the eastern boundaries of Germany, Switzerland and Italy and the western borders of Russia. It reaches from the shores of the Baltic to those of the Black, of the Adriatic and of the Aegean Sea. We shall revert later to the problem of the precise de­limitation of this territory.

This vast territory was in the Europe of the Congress of Vienna divided among Russia, the Hapsburg Empire, Prussia and Turkey. With the dissolution of the Ottoman power in Europe, with the disintegra­tion of the Austro-Hungarian Empire and with the curtailment of the Russian power the peoples of this part of the world obtained autonomy and self-government. But this independence resulted in anarchy and finally in a new partition of the territory involved among the three mighty neighbors, Germany, Russia and Italy. The order established by the treaties of 1856, 1878 and 1919 collapsed catastrophically.

Eastern Europe is the central-seat of trouble and unrest. Both world wars arose in this territory. The units or groups which are bitterly fighting one another in Eastern Europe apply to themselves in their own languages terms which correspond to the English words nation, nationality or people. They consider a community of language as the characteristic feature of a nation. The issue in these fights is always the right to use the national idiom. The terms Germanization, Polanization, Magyarization, etc. always mean: to induce people, by violence or other methods of pressure, to replace their mother tongue by German, Polish, Hungarian, etc.

These are not struggles among races. No distinct bodily features which the anthropologist could establish with the aid of the scientific methods of his branch of knowledge separate the men belonging to differ­ent groups. If you present one of these men to an anthropologist he will not be able to decide whether the man is a German, a Czech, a Pole or a Hungarian.

Neither have the men belonging to one of these groups a common descent. The right banks of the Elbe river were 800 years ago inhabited by Slavs and Baltic tribes only. They became German in the course of the processes which the German historians call the colonization of the East. There was an immigration of Germans from the West and from the Southwest into this area; but the main stock of its present population are the descendants of the indigenous Slavs and Baltic peoples who under the influence of the church and the school turned to the use of the German language. Prussian chauvinists, of course, assert that the native Slavs were radically ex­terminated and that the whole present population are the descendants of German settlers. There is not the slightest proof for this doctrine, which some Prussian historians developed in order to justify the Prussian claim for hegemony in Germany. But even they never dared to deny that the purely Slav ancestry of the princely families and of most of the aristocratic families is beyond doubt. Queen Louisa of Prussia, whom all German nation­alists consider as the paragon of German womanhood, was a scion of the ruling house of Mecklenburg, whose originally Slav character has never been contested. Many noble families of the German Northeast can be traced back to Slav ancestors. The genealogical trees of the families of the middle classes and of the peasantry cannot be established as far back as those of the nobility; this alone explains why the proof of Slav origin can­not be provided for them.

Shifting from one of these linguistic groups to another occurred not only in earlier days. It happened in the 19th century and today is so frequent that nobody ever remarks upon it. Many outstanding personalities in the Nazi movement in Germany and Austria and in the Czechoslovakian, Polish and Hungarian districts claimed by Nazism were the sons of parents whose language was not the German one." Similar conditions prevail in the nationalist parties of all East European linguistic groups. In many cases the change of loyalties was accompanied by a change of the family name. But many radical nationalists have retained their foreign sounding family names which clearly show their alien origin.

Whenever the question is raised whether a group has to be considered as a distinct nation and should therefore as such be entitled to claim political autonomy; the issue is whether the idiom involved has to be considered as a distinct language or as a dialect only. The Russians maintain that the Ukrainian idiom is a dialect only, like the Plattdeutsch in Northern Germany or the Provencal of the felibrists in Southern France. The Czechs propose the same argument against the political aspirations of the Slovaks and the Italians against the Rhaeto-Romanic idiom. (Only a few years ago the Swiss government gave to the Romansh the legal status of a national language.)

There is only one case in Eastern Europe where the characteristic feature which separates two nations is not language but religion and the alphabetical types used in writing and printing. The Serbs and the Croats speak the same language, but whereas the Serbs use the Cyrillic alphabet, the Croats use the Roman. The Serbs adhere to the orthodox creed of the Oriental Church, the Croats are Catholics.

Religious issues, moreover, play only a subordinate role in these struggles of linguistic groups. It is, on the contrary, the linguistic issue which dominates religion. As soon as a linguistic group of the Oriental Church succeeded in obtaining some degree of political or cultural autonomy it freed itself from the religious rule of the patriarch of Constantinople and founded an autonomous church. No dogmatical differences motivated these changes; they were purely political.

At the turn of the 16th and 17th centuries Ukrainian bishops acknowledged the Pope's supremacy. This Uniat Oriental Church was the main instrument in the poor Ukrainian serfs' fight against their oppressors. When Russia conquered the greater part of the Ukraine it violently persecuted this church in order to break the Ukrainian resistance against Russification. Finally the Czars succeeded in ex­terminating the Uniat Church on Russian soil. This church survived only in those parts of the country which were under the rule of the Hapsburgs.

All those parts of Eastern Europe, which in the middle ages acknowledged the supremacy of the Pope, were some hundreds of years ago terribily shaken by religious struggles. But times have changed. Today Catholics and Protestants of different denominations jointly cooperate within each linguistic group. Loyalty to the nation means for them more than the community or religion.

Only a few words have to be devoted to the Panslavist idea. The Russian governments — both that of the Czars and that of the Soviets — favored, at different times, a doctrine which assigned to the Russians, as the most numerous Slav nation, the task of freeing all Slav brethren from the yoke of the Germans, the Turks, the Italians and the Hungarians. As far as Panslavism means more — namely, the establishment of a unitary state including all Slav peoples under Russian hegemony — it was nothing else than a poor disguise for Russian imperialism. The Poles and the Ukrainians, who both knew what Russian rule meant, always opposed it bitterly. Neither are the other Slav peoples ready to surrender to Russia.

Nowadays some authors recommend a Union of all Slavs as the best solution of the problems of Eastern Europe. Such a union would mean an alliance of the Slavs for the sake of the oppression of the Germans, Lithuanians, Estonians, Letts, Hungarians, Rumanians, Italians and Greeks living in Eastern Europe. It would not abolish, but perpetuate the struggles.

IV. Present-day Conditions in Eastern Europe

If you ask representatives of the nations of the European East what they consider would be a fair determination of the boundaries of their own countries and if you mark these boundaries on a map, then you will discover that the greater part of this territory is claimed by two nations and that a not negligible part is claimed by three nations. Every nation knows how to justify its claims with linguistic, racial, historical, geographical, economic, social or religious arguments. No nation is prepared to renounce the least of its claims for reasons of expediency. Every nation is ready to resort to arms in order to satis­fy its pretensions. Every nation, therefore, considers its immediate neighbors as mortal enemies and relies on its neighbors' neighbors for armed support of its own territorial claims against the common foe. Every nation tries to profit from every opportunity to satisfy its claims at the expense of its neighbors. The history of the last twenty years proves the correctness of this description.

These claims are not claims of the governments or of "ruling" and "exploiting" classes, as current opinion would have us believe; these are claims of the whole nations and of every member of the respective linguistic groups. The governments are sometimes prepared to renounce some of these claims temporarily, in order to adjust the conduct of foreign policy to immediate political necessity.

The wealthy classes are peace loving, because they do not want to suffer material losses. The radical nationalists, supported by the general consent of the large majorities, rebuke the governments for their cowardice and moderation and the capitalists and entrepreneurs for their selfish materialism. Extreme nationalism is not the work of bribed propagandists; it is a mentality created by the teachings and writings of sincere poets, writers and scholars. The teachers and the youth are the most enthusiastic supporters of chauvinism and nationalism. The nationalism of public opinion is intractable and intransigent and eliminates from the public scene every politician and every party suspected of being lenient in "national" concerns. The most radical na­tionalists terrorize the moderate men, because everybody knows that the voters favor the most radical program.

Years ago it could be asserted that only the intellectuals were nationalists, whereas the uneducated masses were more or less indiffer­ent. This is no longer true since the spread of education has caused the disappearance of illiteracy. Besides in our age of economic inter­ventionism and its consequence — economic nationalism — every citizen has a personal interest in the result of these struggles between lin­guistic groups. Every peasant and every worker wishes that the area in which no discrimination is applied against him should be broadened. Every Czech shoe worker derived an immediate advantage from the fact that shoes manufactured in Czech plants could easily be sold in the sheltered markets of Slovakia and Carpatho-Russia. Every Croat peasant was injured by the fact that the Yugoslavian government's export agency dis­criminated against the Croats in purchasing cereals for sale to Germany. Austrian immigration barriers worked harm on all Czechs, Hungarians and Yugoslavs, who were barred from the Austrian labor market, where wages were higher than in their countries.

It is impossible to draw boundaries in Eastern Europe which would clearly separate linguistic groups. A great part of this territory is linguistically mixed, i.e., inhabited, by men of different languages. Every territorial division would therefore necessarily leave minorities under foreign rule. These minorities are the bearers of permanent un­rest, of Irredentism and hatred.

To dispose of the problem of minorities in a peaceful way two methods had been suggested.

One method was the protection of minority rights by international law and its enforcement by international tribunals. The method failed. The economist has to recognize that such a system could be successfully applied only in a world of free trade and unhampered market economy. It must needs fail and it did fail in our age of economic intervention­ism. A law cannot protect anybody against measures dictated by alleged considerations of economic expediency. All measures of government in­terference in business can be and are used in countries inhabited by different linguistic groups for the sake of injuring the minorities. Customs tariffs, foreign exchange regulations, taxation, subsidies, labor legislation, and so on, may be utilized for discrimination al­though this cannot be proved in court procedure. The government can always explain such measures as being dictated by purely economic con­siderations. If licenses are denied to members of the minority but on the other hand are granted to the members of the privileged group the interference of an international tribunal is in vain. A system of foreign exchange regulation can be used to struggle all business activi­ties of the minority. By means of subsidies the minority has to contribute to the bounties paid to its competitors who belong to the ruling linguistic group. Where the export trade of agricultural produce is nationalized and a government agency is the only buyer on the export market, discrimination in making purchases and in prices paid is practiced against the minority. With the aid of government interfer­ence in business, life for the minorities without formal violation of legal equality can be made unbearable. In our age of interventionism there is no legal protection available against an ill-intentioned government.

The impracticability of protecting minorities by international tribunals led to the proposal of another solution — the transplantation of minorities. This method could work only in a world in which all parts offered the same natural opportunities for production. In our actual world where the natural conditions for production are un­equally distributed, the execution of such a plan would only aggravate existing inequalities and therefore intensify the desire for territorial expansion. When Hitler withdrew some German minorities from the East, he did so because he believes that he has much more fertile land to offer them.

The reform most commonly suggested recommends to these nations the formation of an economic union. An economic union would, under present conditions of government interference in business, have to in­clude a complete unification of all branches of economic policy. It would shift the political center of gravity to the executive office of the union and reduce the national governments to the level of provin­cial and local auxiliaries. We may witness today how in all federa­tions the power of the member states is gradually shrinking and that of the federal authorities increasing. This is not an accident. It is rather the unavoidable consequence of economic interventionism.

The western nations are unjust when they ridicule the anarchic conditions in Eastern Europe and the inability of their rulers to find a way for peaceful neighborliness. These eastern nations do nothing else than imitate the economic policies of the western democracies. They apply the measures of economic nationalism. This means they dis­criminate against foreigners because they believe that in this way they can further the welfare of their own citizens. They have invented nothing; they have only taken over. It is not their fault that the contradictions and deficiencies of economic nationalism are more glar­ing under the conditions in which they have to live.

There is general agreement today that the principle of unlimited sovereignty cannot be maintained in a world where the international division of labor results in a mutual dependence of every nation on all other nations. Notwithstanding this consensus nothing was done to limit the power of each nation, even the smallest one, to behave as if it were alone in the world. This contradiction is to be explained by the confusion which the term "limited sovereignty" involves. The con­cept of sovereignty, i.e., supreme power, does not allow for any limi­tation. A power may be supreme only if unlimited. If the power of a nation is limited so as to exclude some measures only, the remaining power can be used for the annihilation of this restriction. If, for instance, customs tariffs are excluded or limited it is possible to use other powers to render this limitation meaningless. It is possible, for example, to use the measures of veterinarian policy or measures for fighting plant diseases in a protectionist way, not to mention foreign exchange control and other methods. A pure limitation of sovereignty is not enough when the spirit of economic nationalism is allowed to survive. A total suppression of local sovereignty is necessary in order to insure good will and cooperation. To make Eastern Europe peaceful it is indispensable to vest the whole sovereignty in one democratic body ruling the entire area, which for more than 25 years has been a theatre of continual warfare and destruction.

The world as a whole is not yet prepared to renounce national sovereignty in favor of a world government. The commonwealth of free nations and free men is today an utopian concept only. Great ide­ological changes have to take place until a mentality of universal peace and world-wide cooperation will have replaced the present-day spirit of conquest and mutual hatred.

But Eastern Europe cannot wait any longer. Here something has to be done immediately. A return to the conditions of 1933 is out of the question. Conditions in which every sovereign state is looking for an opportunity to annex some territories belonging to its neighbors and every government considers a large number of its citizens as pariahs cannot be maintained.

We may assume that every linguistic group is honest in believing that its own claims are better founded than those of the competing groups. But we cannot agree with the repeated assertions of some lin­guistic groups, that the yoke which they impose on other groups is more fair and reasonable and less hard than the yoke imposed on them by other linguistic groups. The judgment of the oppressed has not less weight than that of the oppressors. No linguistic group should be per­mitted to inflict harm on members of other groups. No "protectorate" can be considered as justified, if the "protected" do not want the alleged protection.

We have to realize that the principle of nationality, as devel­oped in Western Europe, is simply inapplicable in Eastern Europe where the linguistic groups are inextricably mingled. The political system of Eastern Europe cannot therefore be built up as a replica of that in the West. New standards have to be applied.

The foremost aim of a new order in Eastern Europe is to eliminate the problem of linguistic minorities. To be a member of such a lin­guistic minority means to be an outlaw. Every Slovak will say that this was the status of Slovaks in Hungary (before 1918) and in Czechoslovakia. (from 1918 to 1939); every Hungarian will say that this was the status of Hungarians in Czechoslovakia and is today in Slovakia; every Czech will say that this is today the status of Czechs both in those terri­tories which the Reich has annexed since 1939 and in the Protectorate. It is the same with all similar cases all over Eastern Europe. There were and are autonomy and democracy only for the members of the ruling linguistic majorities; the members of the minorities have the disadvan­tages but not the privileges of citizenship.

It is immaterial to enter into a discussion of the claims of all these linguistic groups concerning their respective cultural values. It is of no concern whether or not the Hungarian civilization is higher than that of the Rumanians or of the Croats. The fact that Goethe, Kant and Beethoven were Germans does not justify the methods applied by the Nazis against the Czechs and the Poles; Mussolini may be right or wrong that Dante means more for humanity than Walter von der Vogelweide; but what relationship has this comparison of two poets to the problem of the oppression of the German-speaking inhabitants of Bozen and Brixen? It is grotesque that both Germans and Poles claim Copernicus for their own nation. It is beyond doubt that Copernicus wrote in Latin. There were in his time neither German nor Polish books on mathematics and astronomy; all the lectures which were de­livered at the Italian, German and Polish universities were delivered in Latin.

We do not have to discuss the question whether it is of any value for mankind that the Czech, the Polish, the Ukrainian or the Serb civilizations should survive. The only fact which we have to face is this: there are people who wish to use freely the language which their parents have taught them. This legitimate desire has to be satisfied.

It is not true that in order to develop its own civilization a linguistic group needs a government whose sovereignty can be used to inflict harm on other linguistic groups. No Hungarian can derive any advantage from the fact that to a Slovak or a Rumanian the right to use his native tongue is denied.

The treaties of 1919 brought large minorities of Germans, Russians and Ukrainians under the rule of Czech and Polish majorities. This state of things could not be maintained except by a power strong enough to prevent both the Reich and the Soviet Union from interfering. It was based on the readiness of the French and the British to fight for the Czechs and the Poles.

Of course, neither Germany nor Russia has a right to oppress the Poles or the Czechs. But their title is no worse than the title of the Czechs against the Germans in the districts of Eger and Reichenberg or of the Poles against the Ukrainians in Eastern Galicia.

We do not mention these deplorable events of the past in order to blame anybody or in order to discover some nation's guilt. It is imma­terial to establish who the first aggressors were. It is without any consequence whether Bohemia in the early Middle Ages was inhabited by Germans or Slavs or whether the Germans came to Bohemia only in the late Middle Ages as colonists. An argument like that between Hungarian and Rumanian scholars concerning the question of whether the Rumanian settlement in Transylvania took place earlier or later is futile. It is useless to inquire whether the century-old hatred between Poles and Russians was inaugurated by Polish or by Russian aggression. Let by­gones be bygones. We do not have to revenge crimes of the past, but to build up a future, where people can enjoy the blessings both of peace and freedom.

V. The Requisites for a Permanent Settlement of the East European Problem

In order to make Eastern Europe safe for peace it is necessary to establish a state of things where war does not pay. The average citizen should not expect any profit from a war in which his own linguistic group would be victorious over one of the other linguistic groups. Within this area borderlines must lose their present meaning. They must not have more importance, in the future, than the frontiers between the 48 states of the United States of America or between the counties of England.

The whole territory of Eastern Europe has to be organized as a political unit under a strictly unitary government. Within this whole area every individual has to have the right to choose the place where he wishes to live and to work. The laws and the authorities have to treat all natives — i.e., all citizens of Eastern Europe — in the same way on an equal footing without privileges or discrimination against individuals or groups.

Within the frame of this new political structure — let us call it the Eastern Democratic Union (EDU) — the old political units may continue to function. A dislocation of the historically developed en­tities is not required. Once the problem of borders has been deprived of its disastrous political implications most of the existing national bodies can remain intact. Having lost their power to inflict evils on their neighbors and on their minorities, they may prove very useful for the progress of civilization and welfare.

There will be, for instance, a Kingdom of Rumania and a Polish Republic. But these former sovereign states will now have to comply strictly with the laws and with the administrative provisions of the EDU. There will be no constitutional limit to the power of the EDU which could be used by an ill-intentioned local government to frustrate the laws and regulations issued by the EDU.

This shows us why the aims of the EDU cannot be realized in the constitutional form of a federation (Bundes-staat). Under a federative system the constitution assigns some branches of government activity to the federal government and other branches to the local governments of the member states. As long as the constitution remains unchanged the federal government does not have the power to interfere with ques­tions which are in the jurisdiction of the member states. Such a sys­tem can succeed and has succeeded only with homogeneous peoples, where there exists a strong feeling of national unity and where no linguistic, religious, or racial discrepancies divide the population.

Let us assume that the constitution of a supposed East European Federation grants to every linguistic group the right to establish schools, where its own language is taught. Then it would be illegal for a member state to hinder directly and openly the establishment of such schools. But if the building code and the administration of pub­lic health and firefighting are in the exclusive jurisdiction of the member states, a local government could use its powers to close the school on the ground that the building does not comply with the require­ments fixed by these regulations. The federal authorities would be helpless because they would not have the right to interfere, even if the grounds given prove to be only a subterfuge. Every kind of con­stitutional prerogative granted to the member states could be abused by a local government. If the fight against crime should be assigned to the member states, they could be slow in protecting the members of a minority group. If they should have the right to establish foreign exchange control they could discriminate against the members of the minority groups in complying with the demands for foreign exchange.

If we want to abolish all discrimination against minority groups, if we want to give to all citizens actual and not only formal equality, we have to vest all powers in the central government only. This would not cripple the right of a loyal local government eager to use its powers in a fair way. But it would hinder the return to methods whereby the whole administrative apparatus of the government is used to inflict harm on minorities.

A federation in Eastern Europe could never succeed in abolishing the political implications of the frontiers. In every member state there would remain the problem of minorities. There would be oppres­sion of minorities, hatred and irrenditism. The government of every member state would continue to consider its neighbors as adversaries. The diplomatic and consular agents of the three big adjacent powers would try to profit from these quarrels and rivalries and might succeed in disrupting the whole system.

The main objectives of the new political order which has to be established in Eastern Europe are:

1. This new system of government has to grant to every citizen full opportunity to live and to work freely without being molested by the hostility of any linguistic group inside or outside the boundaries of Eastern Europe. Nobody should be prosecuted or disqualified on ac­count of his mother tongue or his creed. Every linguistic group should have the right to use its own language. No discrimination should be tolerated against minority groups and its members. Every citizen should be treated in such a way that he will call the country without any reservation "my country" and the government "our government."

2. No linguistic group should expect any improvement of its political status by a change in the territorial organization. The dif­ference between a ruling linguistic group and oppressed linguistic minorities has to disappear. There must not be any "Irrendenta."

3. The system has to be strong enough to defend its independence against aggression on the part of its neighbors. Its armed forces have to be able to repel without foreign assistance an isolated aggression of either Germany or Italy or Russia. It should rely on the help of the Western democracies only against a common aggression by at least two of these neighbors.

VI. The Abandonment of Economic Nationalism

The EDU will have to renounce all hostility against any linguistic group. This includes the elimination of all measures of economic na­tionalism. Economic nationalism is, as already mentioned, a policy which intends to improve the conditions of some groups of citizens by inflicting evils on foreigners; it is a policy of discrimination against foreigners. Foreign goods are excluded from the domestic market or only permitted after having paid an import duty. Foreign labor is disbarred from competition on the domestic labor market. Foreign capital is liable to confiscation. But all these measures hurt at the same time the economic interests of some groups of citizens. An import duty for shoes, for instance, may benefit the people interested in this par­ticular branch of industry, but it injures all consumers of shoes.

It was feasible in linguistically homogeneous nations to justify import duties in the eyes of the consumers. The German protectionists, for instance, succeeded in convincing the majority of the German voters that it is expedient for them to pay a much higher price than the world market price for wheat in order to increase the revenue of the German wheat producers. But in a country inhabited by different linguistic groups such a justification would not be considered as satisfactory. Those linguistic groups whose industrial production is backward will never acquiesce to an import duty for shoes which would benefit the shoe production of those linguistic groups whose industrial production has reached a higher stage of development. They will call such foreign trade policy an exploitation of their own group. The history of the Austro-Hungarian customs union provides us with ample evidence for the correctness of this statement. Sometimes even within linguistically homogeneous nations the discussion concerning the foreign trade policy favors the spirit of disintegration. Both in the Dominion of Canada and in the Commonwealth of Australia the purely agricultural western parts oppose the protectionist policy of the more industrialized sec­tions and even ventured to propose a dissolution of the customs union.

If the EDU would embark on a policy of protectionism its existence would be doomed.

The EDU will therefore be a country of free trade. There will be no protective tariffs nor other measures for the protection of home industries against foreign competition. There will be neither foreign exchange control nor inflationary measures. There will be neither subsidies nor bounties and no migration barriers. There will be a stable currency system with stable rates of foreign exchange.

All objections raised against such a policy of free trade on the part of a single country within a world of economic nationalism and pro­tectionism are futile. It would be a waste of time to refute again the popular fallacy that such a country would not be able to continue any domestic production and only import from abroad.

The far greater part of Eastern Europe is mostly interested in the export of food and raw material. These agricultural, forest, and mining interests cannot suffer any disadvantage from a policy of free trade. On the other hand, it is obvious that none of the industrial in­terests of this territory can assume that the excessive protectionism of the past could be continued even if the EDU should not be formed.

Let us consider the two types of foreign trade policy applied in this territory before 1938 in referring to Austria as an instance of agricultural protectionism and to Hungary as an instance of industrial protectionism.

In Austria the non-agricultural section of the population was ex­ploited for the benefit of agriculture. Food prices in Austria were maintained at a level of much more than 200 percent of world market prices. The peasants got from the treasury much more as bounties than they had to pay as taxes. In the mountain districts the peasants got a premium for tilling the land regardless of whether climatic conditions will allow the corn to ripen. For butter the government, paradoxically enough, paid export subsidies, which were much higher than the world market price of butter. It will be impossible to continue these methods after the war to the disadvantage of the impoverished non-agricultural population.

Hungary on the other hand exploited the agricultural population for the benefit of industrial production. The prices of manufactured goods were much higher than in the world market and in the countries of Western Europe and America. A system of more or less concealed export premiums and tax exemptions furthered the export of manufactured goods which were unavailable to the masses of peasants and poor agricultural workers. It is obvious that such a policy will have to be abandoned sooner or later.

The main economic problem which the peoples of Eastern Europe have to face is relative overpopulation. In respect to the natural conditions which this territory offers for production and in respect to the density of population in areas much better endowed by nature all these countries are overpopulated. The abolition of migration barriers in other parts of the world would result in an emigration of scores of millions from Eastern Europe and would create a tendency towards an equalization of the marginal productivity of labor; wages and farmers' income in Eastern Europe would rise. (Of course, the tilling of the poorer soil would be discontinued.) Migration barriers force these peoples to stay at home and put a check on the improvement of their standard of living. But this problem cannot be solved by any scheme limited to the domestic organization of Eastern Europe. It is a world problem.

The second economic problem of these countries is scarcity of capital. It is unlikely that foreign capital will be available for them. Private investors will have more promising offers for the employ­ment of their funds; foreign governments will consider domestic invest­ment as more useful than the export of capital to Eastern Europe.

Even with a smoothly functioning political organization Eastern Europe will remain a poor country with a standard of life which Americans and Britons will judge as a very low one.

But all these sad facts cannot be considered as valid objections against the scheme proposed. There is no other method left for Eastern Europe to improve its economic conditions than the establishment of a durable peace and the abandonment of the policies which wasted the eco­nomic resources and the capital accumulated in previous years.

VII. Outlines of the New Order

1. The Area of the EDU

The EDU has to include the territories which in 1933 formed the sovereign states of Albania, Austria, Bulgaria, Czechoslovakia, Danzig, Estonia, Greece, Hungary, Latvia, Lithuania, Poland, Rumania and Jugoslavia.

It has to include the whole territory which in 1913 belonged to the Prussian provinces — Eastern Prussia, Western Prussia, Posen and Silesia. The three first-named provinces were once parts of Poland. They were appropriated by the princes of the House of Hohenzollern, but this conquest did not make them a part of the Holy Roman Empire. The fact that the rulers of these countries were at the same time Electors of Brandenburg had legally and constitutionally no other significance than the fact that the kings of England were Electors (and later kings) of Hanover. Neither did these provinces belong to the German Confedera­tion from 1815–1866. They remained "private property" of the Hohen­zollern family. Only after the battle of Koniggrätz in 1866 the king of Prussia incorporated them by his own sovereign decision into the Norddeutscher Bund and later in 1871 into the Deutsches Reich.

Silesia was a part of the Holy Roman Empire only as an adjunct of the Kingdom of Bohemia. In the Sixteenth and Seventeenth Centuries it was ruled by dukes who belonged to a branch of the Piasts, the old royal family of Poland. When Frederick the Great in 1740 embarked on the con­quest of Silesia he tried to justify his claims by pointing out that he was the legitimate heir of the Piast family.

All these four provinces are inhabited by a linguistically mixed population. They returned many Polish members to the old German Reichstag. In Eastern Prussia there is a not negligible Lithuanian minority.

Italy has to cede to the EDU all the European countries which it has occupied since 1913, the Dodecanese Islands and the eastern part of the province of Venice, Friuli, a district inhabited by people speaking a Rhaeto-Romanic idiom.

Thus the EDU will include about 700,000 square miles with about 120,000,000 people using 17 different languages. Such a country when united will be strong enough to defend its independence against the three mighty neighbors, Russia, Germany and Italy.

2. The Constitution

Every adult will have the right to vote. The parliament — one chamber only, with about 600 members — has to be a fair representation of all citizens. The cabinet has to be responsible to the parliament.

The parliament's first task will be to make a constitution. It will decide whether the head of the EDU should be a President or a hereditary ruler.

The parliament will be the only legislative body. All local and provincial councils will be advisory boards only. Every attempt to give more power to provincial institutions and to local boards would neces­sarily revive the problems of borders and of minorities.

3. Local Government

The former independent states will in the framework of the EDU be nothing else than provinces. Retaining all their honorary forms they will have to comply strictly with the laws and with the administrative provisions of the EDU. But so long as they do not try to violate these laws and regulations they will be free. The loyal and law-abiding gov­ernment of each state will not be hindered, but strongly supported by the central government.

Special commissaries of the EDU will have to oversee the function­ing of every local government. Against all administrative acts of the local authorities the parties will have the right to appeal to this commissary, and to the central government, provided that such acts are not liable to be appealed to a tribunal. All disagreements between the commissary and the local government or between different local govern­ments will be ultimately adjudicated by the central government, which is responsible to the central parliament only. The supremacy of the central government will not be limited by any constitutional preroga­tives of local authorities. Disagreements will be settled by the central government and by the central parliament, which will judge and decide every problem in the light of its implications for the smooth working of the total system. If, for instance, there arises a dispute concern­ing questions of the City of Wilno — one of the innumerable neuralgic points of the East — the solution will be sought not only between the Polish and the Lithuanian local governments or between the Polish and Lithuanian members of the central parliament; the central government and the central parliament will try to find a solution which will do justice to similar cases arising in Budweis, in Temesvar or in Salonica.

In this way it may be possible to have a unitary government with a high degree of administrative decentralization.

4. The Budget and the Power to Tax

All financial powers will be vested in the central government and in the central parliament.

The parliament will allocate to every local government for its expenditures a lump sun according to the population of its area. It will, ­in addition, supervise the spending of this money.

It is further advisable to give to every local government the revenue derived from taxes on real estate situated in its jurisdiction. But in any case the laws regulating these taxes have to be enacted by the central parliament.

With regard to provisions for government bonds issued prior to the establishment of the new order an international agreement between the EDU and the representatives of the foreign bondholders will be necessary. New loans will be floated only by the central government or, with its permission, by the bigger cities.

5. The Linguistic Problem

The most delicate problem of the EDU will be the linguistic problem.

All the 17 languages will be treated in an equal way. In every district, county, or community the tribunals, the government agencies and the municipalities will have to use all languages which in their district, county or community are the languages of more than 20 percent of the population.

English has to be used as an international subsidiary language for the dealings between the members of different linguistic groups. All laws have to be published in English and in all 17 national idioms. This system may seem strange and very complicated. But we have to realize that it worked rather satisfactorily in old Austria with 8 languages. Contrary to a widespread error the German language had no constitutional preeminence in imperial Austria.

6. Religion

The peaceful coexistence of different denominations can easily be secured by the adoption of the system which has succeeded in the United States of America.

7. Education

The governments of Eastern Europe abused the system of compulsory education in order to force the minorities to give up their own languages and to adopt the language of the majority. The EDU will have to be strictly neutral in this respect.

There will be private schools only. Every citizen and every group of citizens will have the right to run educational institutions. If these schools comply with the standards fixed by the central government they are subsidized by a lump sum for every pupil.

The curriculum of the secondary education will include the teach­ing of English.

The local governments will have the right to take over the adminis­tration of some schools. But even in this case the budget of these schools has to be kept independent of the general budget of the local government and no public funds but those allocated by the central government as subsidies for these schools may be used.

8. Economic Policy

It is necessary to deny to the government the power to benefit one linguistic group at the expense of others. There will be neither subsidies nor licenses which can be granted or denied ad libitum.

To the general principle that no measures of protectionism should be applied one exception only should be permitted. The importation of commodities from countries which do not treat the imports from the EDU according to the most favored nation standard or do not allow any imports at all may be prohibited or taxed.

9. Measure for the Period of Transition

The first president and the members of the first cabinet have to be appointed by the League of Nations. They will have to hand over their functions to the parliament as soon as it is constituted.

For a period of transition foreign citizens — with the exception of Germans, Italians, Russians and the subjects of totalitarian states will be eligible for all public and judiciary offices and functions.

10. Working of the System

A foreign visitor, more interested in sightseeing than in the study of constitutional and economic problems, will notice the disappearance of the customs barriers and of the variety of national currency systems, but in all other respects it will be impossible for him to ob­serve any change. He will say, "Now I have visited Hungary and I want to go to Rumania." He will not see the EDU; he will not have the op­portunity to meet the agents of the EDU.

There will be the old national flags and anthems. Every member state will have its own postage stamps issued by the unitary postal sys­tem of the EDU. There will be coins of every member state, coined with the national emblems and — in monarchies — with the portrait of the king (as in the German Reich from 1873 until 1914). Of course all these coins will be minted by order of the EDU's government and will be legal tender in the whole territory of the EDU. Every member state and every linguistic group will be free to cultivate intellectual relations with foreign countries and to represent its own civilization abroad.

The individual citizen will have to renounce all claims for privi­leges which could harm other individuals or groups. But he will be free to use his own mother tongue and to bring up his children with the aid of schools where this language is taught. He will not have to consider himself as a citizen of minor status, because all authorities and tri­bunals will treat him in a fair way.

VIII. The Political Chances of the Proposed Plan

We have to realize that the politicians and the statesmen of these eastern nations are united today on only one point: the rejection of such a proposal. They do not see that the only other alternative is the partition of their territories among Germany, Russia and Italy. They do not see it because they firmly rely on the invincibility of the British and the American forces. They do not imagine that the Americans and the British have any other task in this world than to fight for them an endless sequence of world wars.

It would be merely an evasion of reality if the refugee representa­tives of these nations would try to convince us that they have the in­tention of peacefully disposing of their mutual claims in the future. It is true that the Polish and the Czech refugees have made an agree­ment concerning the delimitation of the boundaries and a future politi­cal cooperation. But this scheme will not work when actually put into practice. We have ample experience that all agreements of this type fail because the radical nationalists never accept them. All endeavors at an understanding between Germans and Czechs in old Austria met with disaster because the fanatical youth rejected what the more realistic older leaders had proposed. Refugees are, of course, more ready to compromise than men in power. During the First World War the Czechs and the Slovaks and likewise the Serbs, the Croats and the Slovenes came to an understanding in exile. History has proved the futility of these alleged agreements.

Besides that, we have to realize that the area which is claimed both by the Czechs and by the Poles is comparatively small and of minor importance for each group. There is no hope that a similar agreement ever could be effected between the Poles on the one hand and the Germans, the Lithuanians, the Russians or the Ukrainians on the other hand — or between the Czechs on the one hand and the Germans or the Hungarians or the Slovaks on the other hand.

What is needed is not delimitation of specific borderlines between two groups but a system where the drawing of borderlines no longer creates disaffection among minorities, unrest and irredentism.

Democracy can be maintained in the East only by an impartial gov­ernment. Within the EDU no single linguistic group will be sufficiently numerous to dominate the rest. The most numerous linguistic group will be the Poles; they will comprise about 20 percent of its whole population.

It is not unlikely that some critics will call the EDU a recon­struction of the old Austrian empire on a broader scale. This is true as far as old Austria (but not Hungary!) was the only power among those ruling in this area which tried to treat all citizens on an equal foot­ing. In the Turkish empire all Christians were pariahs. In Russia, Prussia, and Hungary the governments were eager to force all subjects to give up their mother-tongues and to become Russians, German-speaking Prussians, or Magyars. In Austria the constitution of 1867 granted to every citi­zen the right to use his own language and provided equality in the use of all languages in court procedure, in the administration, and in edu­cational institutions. The system failed, because the striving for full national independence of every linguistic group hindered its success. Some details of the suggested constitution for the EDU are based on precisely the lessons which this Austrian failure teaches us and at the same time on the shortcomings of the League of Nations minority pro­tection.

There is no other precedent which we could use in framing a new political system for Eastern Europe. The Swiss Confederation cannot be considered as a useful pattern. In Switzerland the cooperation of the three (or four) linguistic groups was undisturbed as long as its eco­nomic policy was based on free trade. With the trend towards economic interventionism conditions changed. Today there is a not negligible Nazi party in the German-speaking cantons and a powerful pro-Fascist group in the Ticino. The French-speaking cantons strongly oppose what they call the policy of Berne. Switzerland will have to face serious problems in a not too distant future.

There was still another linguistically mixed democratic country in Europe, Belgium. Here too the linguistic diversion disrupted the political unity. The military defeat of Belgium was to a great extent due to the irrendentism of the Vlames. Belgium will have to solve its linguistic problem in the future.

We do not have to discuss in this context the general problem of government interference with business. It suffices to realize the fact that the system of interventionism can never work satisfactorily where different linguistic groups are determined to use it as a weapon in their wars aiming at mutual extermination.

More serious would be the objection that the territory assigned to the EDU is too large and that the different linguistic groups in­volved have nothing in common. It seems indeed strange that the Lithuanians should have to cooperate with the Greeks although they never before had had any other mutual relations than those diplomatic ones existing among all nations of the world.

But we have to realize that the EDU has to create peace in a part of the world ridden by age-old struggles among linguistic groups. Within the whole area assigned to the EDU there cannot be discovered any un­disputed borderline. If the EDU has to include both the Lithuanians and the Poles, because there is a large area where Poles and Lithuanians live inextricably mixed and which both nations vigorously claim for themselves, it has to include the Czechs and the Ukrainians too because the same conditions as between the Poles and the Lithuanians prevail between the Poles and the Czechs and between the Poles and the Ukrainians. Then the Hungarians have to be included for the same reasons, next the Serbs and consequently all other nations which claim parts of the terri­tory known as Macedonia, i.e., the Bulgarians, the Albanians and the Greeks.

For the smooth functioning of the EDU it is not required that the Greeks should consider the Lithuanians as friends and brothers. (Although it seems probable that they would have more friendly feelings for them than for their immediate neighbors.) What is needed is nothing else than the conviction of the politicians of all these peoples that it is no longer possible to oppress men who happen to speak a foreign language. They do not have to love one another but to stop inflicting harm on one another.

The EDU will include many millions of German-speaking citizens and some hundreds of thousands of Italian-speaking citizens. It cannot be denied that the hatred engendered by the methods used by the Nazis and the Fascists during the present war will not disappear at once. It will be difficult for Poles and Czechs to meet for collaboration with Germans.

But none of these objections can be considered as valid. There is no other solution for the East European problem which could give to these nations a life of peace and political independence.

Conclusion

The third point of the Atlantic Declaration establishes as a common principle in the national policies both of the United States and of the British Empire that "they respect the right of all peoples to choose the form of government under which they will live; and they wish to see sovereign rights and self-government restored to those who have been forcibly deprived of them." The sixth point expresses the "hope to see established a peace which will afford to all nations the means of dwelling safely within their own boundaries, and which will afford assurance that all the men in all the lands may live out their lives in freedom from fear and want."

These principles are incompatible with the conditions which have prevailed for ages in Eastern Europe. There were many millions of people who were forced to live under governments which they had not chosen. There were countries where 20 percent, 30 percent or even 40 percent of the population were irredentists and expected to be redeemed by the armed interference of foreign powers. These millions considered themselves as having been forcibly deprived of their sovereign rights and self-government. They believed that they were prevented from liv­ing out their lives in freedom from fear and want.

The proposed scheme for an Eastern Democratic Union is the only plan which could adjust political and economic conditions in Eastern Europe to the requirements of the Atlantic Declaration. Its execution would impose on no nation any other sacrifice than the renunciation of the power to inflict harm on other linguistic groups. But it would on the other hand secure them against the risk of falling victim to oppres­sion by other nations. It would make Eastern Europe safe both for peace and democracy.

1. In his biography of Mises, Last Knight of Liberalism[2], Guido Hulsmann describes the essay:"Planning for after the war still occupied a prominent place in Mises’s work. On May 20, 1941, he reported ... that he had made good progress on his research project: a study of the social and economic problems of Central and Eastern Europe, which Mises hoped could serve as a basis for postwar reconstruction in this region. He said he would start writing it soon, and he must have finished it by mid-July, when he sent out copies to friends and colleagues. In this 43-page memorandum, Mises restated the political and economic case for the establishment of an East-European Union with a strong central government: growth through free trade and laissez-faire, response to the problems of linguistic minorities, and protection against the three mighty neighbors." -Ed.

2. A 1941 typed and scanned version of the essay omits the quotation marks around "inferior." The version appearing in Richard Ebeling's collection of essays Selected Writings of Ludwig von Mises Vol. 3, includes the quotation marks. See Matthew McCaffrey on Mises's views on race: "Mises on the Battle between Liberalism and Racism[3]" -Ed.